Securities Commission Malaysia to Explore Blockchain for OTC Market

Securities Commission Malaysia (SC) chairman Tan Sri Ranjit Ajit Singh has announced that the commission will be exploring the use of distributed ledger technology (DLT) in the unlisted and over-the-counter (OTC) market space.

Speaking at the SCxSC Digital Finance Conference 2017, Singh outlined the progress made in digital markets since the commission revealed its Digital Markets Strategy, which aims to enhance access to financing, increase investor participation, augment the institutional market, and develop synergistic ecosystems.

Singh also revealed that the SC is embarking on a DLT pilot project. He said that the findings from this pilot project will be published as an industry blueprint. The blueprint will elaborate upon the technology architecture, key software functions, and development standards which will form the building blocks for interested parties to use the blockchain network for unlisted and OTC markets.

“By using distributed ledger as a technology underpinning the market infrastructure, all transactions and market activities would be recorded and made available to all market participants while maintaining transaction confidentiality.” said Singh.

The chairman added that he will be working closely with Bank Negara Malaysia, the country’s central bank, in developing a framework for blockchain and cryptocurrency. That includes regulations and guidelines to facilitate functional and effective use cases of digital assets in the capital market, including secondary market trading of established cryptocurrency and digital assets. The framework will be released next year.

Back in September, The commission issued a warning on the potential risk of initial coin offerings (ICO). The SC said that investors should take note that ICO operators may not have a presence in Malaysia. Hence, it would be difficult to verify the authenticity of the plan and the recovery of foreign-invested monies that may be subject to foreign laws or regulations.

Singh said they are still closely monitoring the ICO industry. He also said that the commission is now a part of the International Organization of Securities Commisions ICO Consultation network, where regulators are discussing the latest development in the ICO space.